Correlation Between Procter Gamble and Five Below
Can any of the company-specific risk be diversified away by investing in both Procter Gamble and Five Below at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Procter Gamble and Five Below into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Procter Gamble and Five Below, you can compare the effects of market volatilities on Procter Gamble and Five Below and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Procter Gamble with a short position of Five Below. Check out your portfolio center. Please also check ongoing floating volatility patterns of Procter Gamble and Five Below.
Diversification Opportunities for Procter Gamble and Five Below
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Procter and Five is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Procter Gamble and Five Below in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Five Below and Procter Gamble is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Procter Gamble are associated (or correlated) with Five Below. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Five Below has no effect on the direction of Procter Gamble i.e., Procter Gamble and Five Below go up and down completely randomly.
Pair Corralation between Procter Gamble and Five Below
Allowing for the 90-day total investment horizon Procter Gamble is expected to generate 0.32 times more return on investment than Five Below. However, Procter Gamble is 3.15 times less risky than Five Below. It trades about 0.17 of its potential returns per unit of risk. Five Below is currently generating about -0.04 per unit of risk. If you would invest 16,930 in Procter Gamble on August 27, 2024 and sell it today you would earn a total of 698.00 from holding Procter Gamble or generate 4.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Procter Gamble vs. Five Below
Performance |
| Timeline |
| Procter Gamble |
| Five Below |
Procter Gamble and Five Below Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Procter Gamble and Five Below
The main advantage of trading using opposite Procter Gamble and Five Below positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Procter Gamble position performs unexpectedly, Five Below can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Five Below will offset losses from the drop in Five Below's long position.| Procter Gamble vs. Unilever PLC ADR | Procter Gamble vs. Estee Lauder Companies | Procter Gamble vs. ELF Beauty | Procter Gamble vs. Coty Inc |
| Five Below vs. OReilly Automotive | Five Below vs. AutoZone | Five Below vs. Genuine Parts Co | Five Below vs. Williams Sonoma |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Valuation module to check real value of public entities based on technical and fundamental data.
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